Liquidity Mining Rewards

How Rewards are Calculated and Distributed

The reward distribution mechanism in Circularity Finance is a critical aspect of its liquidity mining protocol, involving both CIFI and REFI tokens. This process is meticulously structured to ensure fairness and transparency in how participants are incentivized.

• Based on Deposit Amounts: The fundamental criterion for reward calculation is the amount of money each participant deposits into the Stability Pools. In Stability Pool 1, participants earn 1 CIFI token for every $100 USD deposited, while in Stability Pool 2, they earn 1 REFI token for every $1,000 USD deposited.

• Monthly Distribution: Rewards are distributed on a monthly basis. This regular interval helps maintain a consistent flow of incentives to liquidity providers.

• Proportional Allocation: The distribution is proportional to the participants' share in the pool. The more a participant contributes to the pool's liquidity, the greater their share of the monthly rewards.

• Incorporating SP NFTs: Stability Pool NFTs (SP NFTs) play a vital role in this process. Each SP NFT represents a specific deposit, including details like the amount and the time of deposit. This information is crucial for accurately calculating the individual rewards.

The Use of Smart Contracts for Automated Reward Distribution

Smart contracts are at the heart of Circularity Finance's reward distribution mechanism, providing automation, transparency, and security.

• Automation of Calculations and Distributions: Smart contracts automatically calculate the amount of rewards each participant is entitled to based on their SP NFTs. This automation ensures efficiency and timeliness in the distribution process.

• Transparency and Trust: Since smart contracts operate on predefined rules and are executed on the blockchain, they offer a high level of transparency. Every participant can verify how rewards are calculated and distributed, fostering trust in the system.

• Eliminating Human Error and Bias: The use of smart contracts minimizes the possibility of human error or bias in the reward distribution process. This is crucial for maintaining fairness in a decentralized finance environment.

• Adaptability and Upgradability: Smart contracts can be designed to adapt to changing conditions or rules within the platform. If the reward structure needs to be modified in the future (for instance, to adjust to a larger user base or changing market conditions), the smart contracts can be updated accordingly while maintaining the integrity of the process.

The reward distribution in Circularity Finance is a well-orchestrated process that relies heavily on the amount of liquidity provided by participants and the use of smart contracts. This approach not only ensures a fair and transparent distribution of rewards but also aligns with the decentralized and automated nature of blockchain technology, which is central to the ethos of DeFi platforms like Circularity Finance.